Valid registration certificate protects declaration form use; later cancellation of purchaser's status cannot fasten sales tax liability.

A dealer may rely on a purchasing dealer's registration certificate while it is valid at the time of the transaction, and later cancellation or a subsequent finding that the purchaser was non-genuine does not by itself invalidate use of declaration form ST-17A. Because the sales were made during the relevant assessment year, were recorded in the books, and were paid by account payee cheques, the selling dealer could not be fastened with misuse of the declaration form. The demand for differential sales tax, interest and penalty was therefore unsustainable.

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Issues: Whether the assessee's use of declaration form ST-17A was invalid because the purchasing dealers were subsequently found bogus or non-genuine and their registration was later cancelled, thereby justifying levy of differential sales tax, interest and penalty.

Analysis: The relevant sales transactions had taken place during the assessment year 2001-02, when the purchasing dealers' registration certificates were valid and in force. The transactions were recorded in the books of account and payments were made by account payee cheques. The subsequent cancellation or rejection of the purchasers' registration, much after the transactions and after the accounting year had closed, could not be used to fasten liability on the selling dealer. The principle that a dealer may rely on a registration certificate while it is current was applied, and the later finding that the purchasers were bogus did not make the earlier sales misuse of the declaration form.

Conclusion: The assessee was not guilty of misuse of the declaration form, and the demand for differential sales tax, interest and penalty was unsustainable.

Ratio Decidendi: A dealer who acts on a registration certificate that is valid at the time of the transaction cannot be denied the statutory benefit merely because the certificate is cancelled retrospectively or the other dealer is later found to be non-genuine.

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